[Journal:] International Journal of the Economics of Business [ISSN:] 1466-1829 [Volume:] 26 [Issue:] 1 [Pages:] 157-176
Most marketing practitioners and scholars agree that marketing assets such as brand equity significantly contribute to a firm’s financial performance. In this paper, we model brand equity as an unobservable stock that results from up to 30 years of past brand-related investment flows. Using firm-specific trademarks as investment proxies, our results show a significant long-run impact on financial performance. The dynamic profile of brand-related investments has an inverted-U shape that reaches its peak after 11 years. On average, it takes four years before brand-related investments show a positive return, and investments older than 19 years show no significant impact. For the median trademarking firm, brand equity contributes €265,000 to annual profits.
Brand Equity Firm Profitability Intellectual Property Rights Trademarks